Muscat: Hotels in Oman managed to maintain their occupancy levels in 2016 at the level achieved in 2015 even though the economic slowdown took its toll on the country’s hospitality industry, according to a report by Ernst and Young.
Hotels dropped room rates by more than 13 per cent in an effort to keep residency level at 65 per cent in 2016, according to the report’s findings and, although the revenue per room also dropped by 13.2 per cent, both hotel officials and consumers believe this is a great sign for the Omani economy.
“We have been hit hard, not only because of the low oil prices but also the global slowdown,” a senior hotel official said, referring to economic issues stemming from Europe and oil price crisis.
“Disposable income of tourists defines our revenues. If it goes down, we struggle. It is a natural process. However, I believe that all hotels in Muscat brought down their rates which were very high when compared to most other countries in the GCC. Our occupancy rates dropped by nearly 10 per cent but as the report mentions, if others were able to keep it stable, it shows that Omani economy is weathering the storm well and should be out of it (the slowdown) earlier than expected,” he said.
According to data provided in the report, average room rates in the Omani capital fell from OMR82 in 2015 to OMR71 last year, representing a drop of 13.3 per cent. Monthly performance index showed that occupancy level in December 2016 rose by a point to 72 per cent when compared to December 2015, while rates dropped by 15.2 per cent during the same period.
“I think the drop in prices is excellent. As long as prices remain high, Oman will not be attractive to middle class travellers around the globe. I think it is a great achievement if they have kept the occupancy level same and (this situation is) perfect for the economy, considering this is the worst time for any sector,” said Maaz Firdous, an engineering consultant.
Yousef Wahbah, MENA Head of Transaction Real Estate at EY says: “The five-star and four-star internationally branded hotels of Muscat maintained a consistent occupancy of 65 per cent across 2015 and 2016 though the average room rates dipped in 2016. This year we expect the hospitality market to still face a few challenges due to the recovering global economy.
“The Oman Ministry of Tourism continues to invest in the hospitality sector to draw tourists to experience the Sultanate’s history, culture, and natural wonders. The new direct flights to the United Kingdom, specialized tourist packages, and eventual redevelopment of Muscat International Airport will all contribute to achieving the Tourism 2040 strategy and help increase hotel revenue.”
Low oil prices and strengthening dollar against European currencies were identified as the key growth restrictors for MENA’s hospitality markets as lack of government spending and reduced European travellers impacted hotel earnings.
Comparatively, Muscat’s hospitality industry has fared as one of the best amongst the GCC countries, being the only city to have maintained occupancy level apart from Ras Al Khaimah in the UAE and Manamah in Bahrain, both of which registered an increase in the occupancy rate.